New Jersey's Attorney General has sued Arizona billionaire John Kapoor for endangering the public through an unlawful marketing campaign for a powerful pain-relief medication aimed at patients for whom it is not intended.

The announcement about the lawsuit filed in New Jersey Superior Court came on Friday one day after Kapoor, the founder and former CEO of Chandler-based Insys Therapeutics, pleaded not guilty in federal court in Boston to charges including racketeering, mail fraud and wire fraud.

The company's opioid pain-relief drug, Subsys, was approved by the Food and Drug Administration only for treating breakthrough pain in cancer patients, according to a statement by New Jersey's attorney general, Christopher Porrino.

However, the drug was inappropriately prescribed to other people through a campaign of fraudulent claims and unlawful payments to doctors and other medical practitioners, the complaint added.

Porrino said his office rejected the argument that Kapoor was only a "hands off" observer with regard to the company's marketing campaign for Subsys, which state officials say led to the death of at least one New Jersey woman.

The complaint noted that Kapoor founded Insys Therapeutics, served as its president, CEO and chairman, and remains its largest shareholder.

Kapoor was arrested in Phoenix last month and indicted in federal court in Boston. He is charged with racketeering, mail fraud and wire fraud. Federal prosecutors allege company officials conspired with doctors and other medical practitioners to prescribe Subsys to a wider range of patients than the terminally ill cancer-sufferers for whom it is intended.

The New Jersey suit said two state employee health-benefit plans paid $10.3 million to reimburse Subsys prescriptions between 2012 and 2016, while the state's worker's compensation program paid $300,000.

Kapoor, 74, has been free on $1 million bail since he was arrested at his Phoenix home in October. A native of India who is now a U.S. citizen, Kapoor was ordered to relinquish his passport.

He was listed last year among seven Arizonans who made the Forbes list of wealthiest Americans, with an estimated net worth at the time of $2.1 billion. Amid a subsequent plunge in the value of Insys' stock — currently trading near $5 a share, down from a peak above $46 — Forbes removed him from the 2017 list, which had a personal-wealth cutoff of $2 billion.

Insys, which employs around 400 people, has set aside $150 million in reserves to settle various claims against the company but conceded the amount might not be sufficient.

Reach the reporter at russ.wiles@arizonarepublic.com or 602-444-8616

CLOSE

The founder of drugmaker Insys Therapeutics Inc., John Kapoor, pleaded not guilty to charges that he participated in a scheme to bribe doctors to prescribe a fentanyl-based spray intended for cancer patients.
Wochit